Account Freezing Orders

The legal test for making an Account Freezing Order (AFO) is that there must be reasonable grounds for suspecting that the money held in an account is either recoverable property or intended for use in unlawful conduct.

AFOs are civil cases which are heard in the Magistrates’ Court civil jurisdiction and so the standard of proof is ‘on balance’. Taking the legal test and the standard of proof together mean that it is very easy for the authorities to get an AFO if they decide one is needed.

Unless the person whose account is or could be frozen engages with the police to demonstrate that the money in the account comes from a legitimate source, it will be very difficult indeed to persuade either the Court or the applicant that an AFO is unnecessary. Even if a respondent does engage, the applicant may argue that it needs time to make its own enquiries during which they want the AFO to remain in force.

AFO cases are usually complicated. They almost always involve financial evidence like bank statements (often from more than one account). They often involve detailed statements from multiple witnesses, not least the person or people whose accounts are affected by the Order. The pressure on the Magistrates’ Courts – on the whole Criminal Justice System – in recent years is well documented.

Where a respondent is on notice of an application for an AFO, they have the right to oppose it. When the order has already been made without notice, the respondent can apply at any time for it to be set aside. In the process of opposing an AFO, a Respondent may well serve detailed evidence setting out why the money in their account is legitimate. The evidence takes time to be presented to, and considered by, the Court. The practical reality is that the Courts do not have time to list lengthy hearings at short notice to properly consider the complexities of the evidence. This means that challenging the AFO can take time

If an AFO is made, then there may be grounds to apply to vary or set it aside. The grounds for setting aside an AFO include the original statutory test not being met or no longer being satisfied, procedural defects (such as lack of notice or opportunity to be heard), material non-disclosure or misrepresentation at the time the order was made, and any material change in circumstances since the order was granted. The court will also consider whether the order is proportionate and whether it unduly interferes with the affected party’s rights, including the ability to meet ordinary living or business expenses. These principles are supported and clarified by case law, which emphasises the need for fairness, the preservation of the status quo, and the avoidance of orders that are oppressive or unnecessary.

The court’s discretion to set aside or vary an AFO is broad and is exercised on principles including the need for full and frank disclosure and the avoidance of orders that are unnecessary or excessive.

Applications to set aside an AFO must be made in writing, specify the grounds relied upon, and be submitted to the appropriate court. The court must ensure that all parties and any person who may be affected by its decision have an opportunity to be heard before varying or setting aside the order.

An applicant does not necessarily bear the burden of proving on the balance of probabilities that the property is not recoverable; rather, the court exercises a general discretion, taking into account all relevant circumstances.

This is not legal advice; it is simply a note by Holywell Chambers. For legal advice please contact chambers.